Improving M&A Integration Effectiveness Through the 21 Dimensions of Culture

For the last 30 years, Culture has been one of the main reasons for M&A deal failure. Guidehouse experts have sought to understand the M&A integration culture challenge and, in the process, have met with countless professionals and dealmakers from across the industry, read numerous academic papers on culture and incorporated deep experience leading M&A integration efforts for clients. Through this effort, Guidehouse experts encountered many different definitions of culture. These myriad definitions and personal interpretations at best caused confusion amongst executives and, at worst, made it seem as if executives were speaking different languages. Guidehouse's response was to make culture measurable. Through primary and secondary research, Guidehouse identified 21 measurable dimensions of culture that can be used as a tool to help effectively merge cultures and realize synergies.

Guidehouse's 21 Dimensions of Culture have been grouped into 6 categories - Client Focus, Management, People, Operations, Style and Shared Values. 

 

Client Focus:

  • eMarketing / Client Service: High touch, self-service, direct, media, sponsorships
  • Client Profiles: Consumer market, industries, demographics, trends

Management:

  • Goals & Measures: Key metrics for the organization, people, goal setting process, accountability
  • Decision Making: Decision making flexibility, process, data driven, authorized approvals, levels of approval, speed
  • Leadership Behaviors: Management styles, philosophies, tendencies
  • Investment Process: Investment focus, process, criteria, decision makers, accountability
  • Strategy: Business plan, investment profile, go to market approaches

People:

  • Organizational Structure: Spans and layers, titles, functional vs. process, shared service heavy vs. Line of Business (LOB) driven, LOB/product/geography based, roles and responsibilities
  • Staffing & Selection: Interviewing, hiring decision making process, candidate profiles, skills, experience, levels of approval
  • Tenure: Career employees vs. transient employees

Operations:

  • Execution Methodologies: Waterfall, agile, tools, technology
  • Credit Culture: Lending appetite, focus, types
  • Reward & Recognition: Incentives, compensation plans, bonus structures, non-monetary rewards
  • Technology Aptitude: Technology skills, expertise, experience, focus

Style:

  • Physical Environment: Locations, telecommuting, equipment, building types
  • Communication: Formats (e.g. Reports vs. PowerPoint), messaging, channels, audiences
  • Customs & Norms: Interaction behaviors, meetings, emails, conversations, etiquettes
  • Celebrations & Events: Celebration activities, types of events, timing

Shared Values:

  • Diversity & Inclusion: Organizational diversity and commitment to inclusion
  • Values: Clients, shareholders, people, quality
  • Rules & Policies: Governance, command and control, consequences and enforcement, maturity, autonomy

What does this mean for your business?

Culture is a critical component of any M&A integration effort. Using the 21 Dimensions of Culture can help your firm establish a standard, firmwide definition of culture. Additionally, the 21 Dimensions can be used as a tool to pinpoint the differences between the acquiring firm and target firms' cultures and can serve as the launching point for developing a cultural integration roadmap. In this way, the 21 Dimensions can help your firm identify, adapt, and evolve in response to cultural challenges. 

 
Note: Descriptions of 21 Dimensions of Culture above are intended to be representative and are not fully exhaustive.
 
Special thanks to Jason Mraz for contributing to this article.

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